Hello, correct me if I am off base.....Young management have a portable 401k with no defined pension.......MIP is half now and the balance spread out over the next 5 years with forfeiture of any balance not received if the person leaves prior to retirement and/ or death........What is the upside of a portable 401k if you lose the unreceived balance of the MIP if you quit ?............What other take aways are likely to occur in the future to management ?.....Are these to help pay for all the Union Contracts ?........
Youngsters Retirement
- Thread starter Karma...
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pretzel_man
Well-Known Member
In the defined benefit retirement plan, (at least for me), if one leave the company one day before turning 55, pension is about half of what it would be at 55. At least this is what I remember.
Those in the portable plan, they can take with them whatever value they have in their account.
In the defined benefit plan and the portable plan, you lose any unvested MIP, LTI, or LTIP if you leave early.
brownmonster
Man of Great Wisdom
Popeye
Well-Known Member
They don't want "Youngsters" who go into management to stay around for the long haul. It'll be like the military. Either you move up or you move out. There are arguments to be made about whether this is good or bad, but that's the direction things are going. No doubt about it.
Hopefully
OK, then thats why the Teamsters & IAMers have a superior total compensation packet than Management...Its due to lower Management giving it up for the Unions....Was it always this way ?......I defer to the veteran UPS Management for historical insight on this one....
pretzel_man
Well-Known Member
So it has nothing to do with the changing workforce demographics and expectations?
Would this then be true for every company that has a portable benefit plan?
Popeye
Well-Known Member
That's a chicken vs. egg question. Companies have moved to portable benefit plans because too many people retire too early for defined benefit plans to be sustainable. The expectations you refer to are a result of this, not the cause of it. But all the other actions taken by ups regarding management compensation are geared toward paying less to people who don't advance. Since advancement opportunities are shrinking rather than expanding why would talented people want to hang around? MIP used to be the only way to get UPS stock, and the value of the stock always grew at a reasonably good rate. Now nobody wants UPS stock so they devised this RSU jive to force us to keep it. Do you have any doubt they did this due to the high percentage of people who sold all their stock as soon as they got it? Now if you decide you've had a belly-full of "brown" and you want to leave, you leave a big chunk of your money on the table when you go. Instead of making UPS a good place to stay they're trying to make it a bad place to leave. Switching from the carrot to the stick, so to speak.
pretzel_man
Well-Known Member
I have no doubt that the change in stock was to reward those who stay (or punish those who leave).
I do NOT believe that the change to a portable plan was for the reason you gave. Way before that change, Corporate HR began talking about the change in workforce demographics. Way before. There were discussions on the Gen Y workforce and their desires.
If you recall, prior to the change, they did a survey. They asked us all what was most important.
I heard directly from Allen Hill in a presentation on this. He said that the results showed distinct differences in desires of the generations.
Old timers like me wanted everything left alone. New employees wanted to control their own pension. Most other companies do this and it was seen as a necessary move.
Are there other benefits to UPS? I don't know. It certainly benefits an employee who is not staying with UPS their whole career.
It seems to me that if people were leaving anyway, UPS would be better off not making the plan portable. The company would owe less? (I would think)
What you say is true except that Gen Y wants both the control of their 401k and the stock they have earned but not received stolen from them if they leave....What kind of a "portable pension" would that be. if you dont get what you have earned....in the past the stock was seen as sacred and not to be sold unless you had the OK and a serious talk with the District Manager....The stock was seen as the pension while the monthly pension was seen as spending $$$....all that changed once the company went public and ceased being mr casey's company and began being just another company.....
I believe that UPS doesn't care that it's portable. The real savings to UPS is in ending the traditional pension plan. These past 2 years are a good example. When the stock market nosedived in 2008 & 2009, many people in various other businesses had their "retirement plan" (401K plan) assets reduced by up to 40%. All the burden of retirement savings is on the employee- the companies matching contributions are constant. For those of us who get or will get a UPS pension, the burden of ensuring that the plan has enough retirement dollars, is on the company.
The question that I have concerns the end of the 401K match (which I believe is being re-instituted in January). Did the younger UPS supervisors and managers, the ones that don't qualify for the traditional pension plan, also lose their match? I can understand the older management people losing the match because we are covered by the pension plan. But the younger management people don't have a pension, so the match is their only UPS contribution.
CleverNick
Member
I think people are mixing up the pension with the 401k. Let me see if I can add some clarity to this discussion:
The "new" pension (i.e. the one offered to those hired in 2008 and later) is not a 401k plan. The company sets aside money to a retirement account according to a formula based upon salary and years of service. I don't remember the exact details since I was hired before 2008. This money gets credited with a certain rate of interest and grows over time. If you leave the company, that money is yours to take with you. If you stay with the company and retire, you get however much money is in that account. I am guessing that you have the option to take the money as an annuity (i.e. yearly payments) but again I don't know for sure since I am not in that plan.
Contrast that to the "old" pension where the company gave you some defined benefit when you retire based upon your salary and your years of service. UPS doesn't set aside money specifically for you so if you leave, you can't take the money with you (although when you turn 65 you can still collect whatever pension you earned while you were here).
The advantage of the new plan is that if you do leave before retirement, you can take the money and continue to invest it on your own. The disadvantage is that if investment results are lousy, you take the hit. Under the old plan, since the benefit is defined by the formula, if the pension plan's investments do lousy, UPS has to kick in additional money to pay its obligations.
All this is separate from the 401K plan where money is taken out of your paycheck and put into an investment account which you control. In addition, UPS provides a match. My understanding is that people under the new pension get a slightly better match to help equalize them with people on the old plan. Not sure exactly what that means, but that is what I understand.
Anyway, I am not in HR or Corporate Compensation, so keep in mind that everything I said could be totally wrong!
The "new" pension (i.e. the one offered to those hired in 2008 and later) is not a 401k plan. The company sets aside money to a retirement account according to a formula based upon salary and years of service. I don't remember the exact details since I was hired before 2008. This money gets credited with a certain rate of interest and grows over time. If you leave the company, that money is yours to take with you. If you stay with the company and retire, you get however much money is in that account. I am guessing that you have the option to take the money as an annuity (i.e. yearly payments) but again I don't know for sure since I am not in that plan.
Contrast that to the "old" pension where the company gave you some defined benefit when you retire based upon your salary and your years of service. UPS doesn't set aside money specifically for you so if you leave, you can't take the money with you (although when you turn 65 you can still collect whatever pension you earned while you were here).
The advantage of the new plan is that if you do leave before retirement, you can take the money and continue to invest it on your own. The disadvantage is that if investment results are lousy, you take the hit. Under the old plan, since the benefit is defined by the formula, if the pension plan's investments do lousy, UPS has to kick in additional money to pay its obligations.
All this is separate from the 401K plan where money is taken out of your paycheck and put into an investment account which you control. In addition, UPS provides a match. My understanding is that people under the new pension get a slightly better match to help equalize them with people on the old plan. Not sure exactly what that means, but that is what I understand.
Anyway, I am not in HR or Corporate Compensation, so keep in mind that everything I said could be totally wrong!
FracusBrown
Ponies and Planes
I think you are mistaken. My understanding of the pension plan for new management people is that there is none. The only form of retirement they receive is the 401k match.
On the positive side they get to take the entire "none" with them when they leave. It's portable!
They also get to take their 401k if they were smart enough to contribute an amount at least equal to the match. In most cases they take a pay cut the first few years of management if they were a full time hourly, so they probably don't contribute.
If they contributed nothing to the 401k, they will leave with what they started with - "nothing" and "none."
pretzel_man
Well-Known Member
Are you 100% sure about that???
The October 2008 FAQ's implies something different.
It says:
"UPS sponsors the UPS Retirement Plan and funds it--- with no contributions required of employees. In order to provide employees with future retirement income employees can make contributions to the UPS Savings Plan ..."
It also says:
"Portability is one of the new features of the PAF. Once vested, you may take your vested PAF account balance with you when you leave UPS for any reason".
Since I am not covered by the PAF, I am not 100% sure. I'm just reading the materials.
----Edit----
I found the original presentation. It mentions BOTH a PAF and Savings Advantage.
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upssalesguy
UPS Defender
I'm so confused right now and my local HR wants a new job so they don't have any information for me. I did get something in the mail about my pension and it said I was vested and as of right now if i retired I'd get about $541 per month (I think when I turn 65?)
I was hired in 2005 so I think I should just expect 40% of the average of my five highest salary years at UPS?
I was hired in 2005 so I think I should just expect 40% of the average of my five highest salary years at UPS?
pretzel_man
Well-Known Member
We all probably got that letter. It doesn't say at what aget you get that dollar amount.
Look on the back, and there is a section highlighted in black.
Its much easier to use the retirement calculator. You can try many combinations to help you make decisions. You can change assumptions, date of retirement, how you take payments, etc.
The number they sent me was higher than what I would get at a retirement at 55. Lower than what the calcuator said at 65. Maybe there is another combination I didn't try.
Anonymous 10
Guest
CleverNick
Member
FracusBrown:
The only correct thing that you said in your post was the "I think" in "I think you are mistaken". At least you qualified it by saying that you weren't sure! After those first two words, it was all downhill from there.
Pretzel_Man did a great job of proving your statements wrong, so I won't reiterate them. However, I have noticed that in this post and previous ones, you seem to be very pessimistic in general. There certainly have been some changes which have negatively affected us over the past few years. However, I think you need to keep in mind two things:
1. It doesn't do your credibility any good when you post stuff on here that without even doing the most basic research. Like I said, there is enough true stuff to complain about.
2. I worked for a number of other companies before coming to UPS, and what UPS has done over the past few years is mild compared to what other companies have done.
Pay freeze? Many companies have have instituted pay cuts.
RSU? Restricted stock is the rule rather than the exception for most companies. I worked for a company where you got all of your bonus as restricted stock, and you know what the vesting schedule was? 0% for the first five years. 20% after 5 years. 40% after six years. Etc.
No 401k match? Many companies eliminated their match over the past few years. Our reinstated match is not the most generous, but one company I worked for had a vesting schedule for their match. Meaning that you got 20% of your match after 1 year. 40% after 2 years. Etc. UPS gives you 100% of your match immediately.
Pension? Pensions are the exception rather than the rule. This is the only company that I've worked for that has a pension. Plus, they match 401k on top of that.
Health benefit costs going up? That is happening everywhere. All companies are getting socked with higher health care costs, and unfortunately, employees end up bearing some of the brunt of that. However, our plan is quite generous in comparison to some plans that I've been on.
I am not saying it is all roses. Certainly we have been hit with a lot of changes over the last few years, and many if not most have been negative. However, you really need to keep all of this in perspective, too. Yes, there are negatives, but there are also a lot of positives, too. If we are going to harp on the negatives, we also need to be fair and acknowledge the positives, too.
FracusBrown
Ponies and Planes
Nope, not sure. That's why I said "I think." The general perception in my area is that they get no pension. Oddly, I can't find and information through UPS sources (UPSers). It may have been covered in the summary plan description disc. The summary plan desc is no longer posted.
I did find some information on the internet that supports what you said. It appears that the get a percentage of their compensation contributed to an annuity type plan based upon "points" Points are a combination of age and years of service. schedule A. Too much to read
http://www.wikinvest.com/stock/Unit...tirement_Plan,_As_Amended_and_Restated/D30143
Portable Account
Points as of January 1
Portable AccountPoints as of January 1
Formula Schedule A Portable Account
Formula Schedule B Less than 35 5.0% 2.5%35-54 6.0% 3.0%55-74 7.0% 4.0%75 or more 8.0%
I stand corrected, I think...
I stand corrected on the Portable pension. I agree that overall our compensation is pretty good, however I find the "positive" spin placed upon the changes that result in reductions to be insulting and dishonest by omission in most cases.
I like to think of my "pessimism" as openly honest with a reality "spin."
brownmonster
Man of Great Wisdom
Much of this is companies jumping on the bandwagon. Only in the last few years have companies started charging employees for healthcare. Apparently the rates stayed the same for the prior 50 years and only started jumping recently. The day the first company required the employee to kick in it was all over. Maybe if employers would demand that insurers stop raising rates instead of passing them along to their employees the rate hikes would slow. 401K is basically the end of retirement income for most people. Matching 2 or 3 percent of a contribution? Wow.
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